Should business corporations have constitutional rights?

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Sometime in the next week, the U.S. Supreme Court will decide Sebelius v. Hobby Lobby Stores, in which one of the key issues is whether a corporation such as Hobby Lobby can object to federal healthcare legislation on the grounds that mandating employee contraception coverage violates the corporation’s right to religious expression.

I don’t pretend to know how the Supreme Court will decide this case, but, like Citizens United before it, this one raises some fundamental questions about corporate rights, with far-reaching implications for ERI’s work in protecting communities around the world – should business corporations have any constitutional rights at all?

It’s not a crazy question, when you examine the history of corporations and the fact that even within the context of corporations, most constitutional rights are exercised by people, not the “corporation.”

History

Since so many of our Supreme Court justices are obsessed with original intent, let’s tackle history first.

At the time of the framing of the Constitution, there were a few kinds of corporations that were recognized. The “corporation sole” was typically used for religious officeholders, to pass down church property from (for example) one bishop to his or her successor. Most other corporations were chartered by a governmental act, and were predominantly religious and educational institutions. Harvard College, for example, was chartered by the governor of the Massachusetts Bay colony in 1650 (and this charter continues to govern the university’s status). Cities were deemed municipal corporations. And there were a few business corporations granted charters, such as the East India Company.

The idea of a general incorporation law – in which anyone could register a corporation without a governmental act – was pioneered by New York in 1784, but only in the context of religious institutions. It was not until 1795 that any state (in this case, North Carolina) allowed general incorporation for business purposes. And only in 1811 did New York pass the first general incorporation law for businesses that included the signal feature of the modern corporation – limited liability for shareholders. Until the late 19th Century corporations were legally prohibited from owning other corporations; parent and subsidiary corporations did not arise until around 1900.

So at the time of the Constitution and the Bill of Rights in 1789, business corporations did not exist in their modern limited-liability form, and were not allowed to be created at all without a specific governmental act. Thus it’s understandable that the Illinois Supreme Court held, in 1958, that “no corporation has a constitutional right to be a corporation.”

Individual human beings have rights

It’s hard to see how a corporation – which only exists because the government passed a law saying it can exist, and has no right to exist – can then claim constitutional rights. The most fundamental right that human beings have, of course, is the right to life, and corporations can’t claim that.

But perhaps there are good reasons for granting rights to corporations. Lawyers sometimes refer to a “parade of horribles” – all the terrible things that might happen if a particular legal rule is adopted. If corporations had no constitutional rights, could Congress or the courts simply confiscate corporations’ property, prohibit incorporated churches from practicing religion, or outlaw the Sierra Club – a nonprofit corporation – from speaking on issues of public policy?

Most of these concerns can be addressed by remembering that individual human beings still have rights, and corporations are owned by, and made up of, humans. People own corporations, and presumably would still have rights to this property. People practice religion, and cannot be prohibited from doing so. People exercise free speech. (Moreover, Congress already exercises the power to regulate the speech of nonprofit corporations – ERI, for example, as a 501(c)(3) nonprofit, cannot engage in the fundamental free speech activity of electoral advocacy.) And people don’t lose those rights when they join together in groups, whether those groups are called corporations or clubs or associations.

Corporations are not people

It’s only in a couple of areas that a corporation acts in distinct ways from people. Corporations have money, so if money is speech, corporations can speak separately from human beings. Corporations can contract, so corporations as entities can employ people. The Hobby Lobby case demonstrates that it’s mostly in areas involving money and employment that corporate “rights” really arise – there, the issue is insurance coverage offered by the corporation to its employees.

Limiting corporate constitutional rights would mean not that anything goes in cases involving corporations. Corporations have a fair amount of political clout, and surely legislatures are capable of fashioning appropriate protections for corporations – indeed, the biggest protection of all is limited liability, and that has been created by statute. The real issue is whether, when state legislatures or Congress decide that corporations have overstepped their bounds, they are limited by the Constitution in reining in these entities.

Should business corporations have any constitutional rights at all?

There may be hard cases that present difficult questions, but there’s no reason to assume that entities that basically didn’t exist at all at the time of the framing of the Constitution and still don’t have any right to exist should enjoy the same rights as human beings.

The corporate rights agenda is a relatively recent development. As Al Gore and others have noted, modern corporate constitutional rights can be traced back to a memo written by Lewis Powell, then a lawyer for the U.S. Chamber of Commerce, in 1971, shortly before he was appointed to the U.S. Supreme Court. This recent spate of pro-corporate Supreme Court decisions could be undone, by a Supreme Court that is truly committed to original intent. Because business corporations did not exist at the time of the framing of the Constitution, they could not be included in the original intent of those who adopted the Bill of Rights.

If the Supreme Court continues to side with corporations, it will make it more difficult for Congress and the states to regulate their behavior, and protect actual human beings. The Supreme Court has already ruled that corporations have unfettered rights to influence elections (in which only human beings, of course, can vote), and that the Constitution limits what a state can do  to make sure that corporations doing business there are held accountable for abuses. Corporations are currently arguing that laws requiring disclosure of pesticide use and genetically-modified crops violate their constitutional rights.

But Congress and the states can still shift the balance of power back to human beings. The People’s Rights Amendment, which has been introduced by Congressman McGovern and Senator Tester, would make clear that corporations, creatures of statute, can be regulated by statute.

So when the Supreme Court decides Hobby Lobby, look beyond the headlines and think about the more fundamental questions.

Photo CC BY Nicholas Eckhart

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